Faced with the greatest recession since the Great Depression, President Obama has offered not just an "audacious goal," as others have referred to it earlier in this conference, but a BHAG – a Big, Hairy, Audacious Goal

– that "by 2020, America will once again have the highest proportion of college graduates in the world." We all welcome the President's recognition of importance of higher education in meeting the challenges of a 21st century world.

The State Higher Education Executive Officers - SHEEOs - have been carrying this message for years and provided important input to President-elect Obama's transition team as they formulated their agenda, and are delighted that they listened.

I'm honored that I was elected by my fellow coordinating and governing state system heads to chair SHEEO during one of my years as Ohio's Chancellor and am especially proud of the outstanding work that SHEEO's president, Paul Lingenfelter, has done in leading the organization's work –

so proud that I'm happy to borrow some of his slides to help inform my remarks today.

If you'd like more information on state higher education policy thoughts, please go to the SHEEO website where you'll find some of Paul's and others' presentations and white papers.

Although higher education is the only investment that government makes that actually pays back (with an annual return of 15-20% on investment), our governments – especially state governments, for that's where bulk of operating assistance to colleges and universities comes from – haven't been making much of those investments.

During the past 25 years, state funding per student in constant dollars – the blue bars on this chart – has risen and fallen, pretty much in line with state economic conditions, but over time has basically been flat and slightly declining. Total state expenditures have increased in constant dollars during this time, since enrollments have risen – the purple line.

Per student tuitions have doubled, though, after adjusting for inflation – the top gray-green bars.

Our elected officials, good at "heat transfer," have pointed their fingers at America's campuses, blamed them for being profligate, and demanded they increase their productivity.

Institutions have responded by saying our elected policy makers simply need to understand the importance of higher education and provide adequate funding.

These arguments have been going back and forth for at least 40 years, but things haven't changed: Funding continues to be inadequate and campuses continue to do what they've always done.

However, the fact is that the U.S. does spend twice what the rest of the developed world does on educating each college student … and our higher education results haven't changed, while the rest of the world has been catching up and surpassing our college attainment rates.

Why? We've all grown up very proud of America's colleges and universities – for generations, regarded the best in the world. Almost all of us here are the proud products of that system – one in

which my friend, Frank Rhodes, now president emeritus of Cornell University, once quipped, provides the "finest hand-crafted education that money can buy," carrying on a 900-year-old tradition of university education.

Looking back, many politicians admit that they should have invested more in higher education when the economy was good and they had the opportunity, but the economy is now bad and they don't have the money.

But the blame doesn't fall solely on shortsighted politicians. The hard reality is that as other sectors have reengineered and reinvented their operations (wringing out costs while still maintaining and improving the quality of their products and services), the education sector hasn't fundamentally changed its teaching model of students learning at the foot of the master.

Colleges and universities have been among the most staunchly change-resistant institutions on earth. Change and innovation are simply not part of the Academy's DNA.

Or as my colleague Steve Portch from the University of Georgia has observed: "We have found it easier to change the course of history … than to change a history course."

I fear another cycle of inaction.

States, faced with a continued jobless recovery won't be providing needed funding for higher education. Worse, next year they'll have to make up for the lack of one-shot federal stimulus money.

Higher education, buoyed by finally having a president "who gets it," will continue to hold steadfast, hoping for more funding.

As a result, the recovery will be slow, not providing enough revenues to governments to make needed investments to better educate more Americans.

This vicious cycle will continue …
but in the 21st century knowledge and innovation economy …
and the harshly polarized politics we see today …
the undereducated will not have the needed critical thinking ability to
stem social as well as economic decline …
and the result will degrade from vicious cycle to death spiral.

I know this is as "downer" of a message – and I like to think of myself as an optimist – but this death spiral scenario raises thoughts of one of the Academy's own: Albert Einstein. In my decades of working with faculty, I have found that academicians love to sit and "admire" a problem, wallowing in a certain learned helplessness.

As a product of the activist campuses of the late 1960s, I say that higher education can take action and answer the call for increased productivity!

This isn't a cry for professors to teach more courses or to blindly exploit technology.

There are other routes to increasing productivity. But we need to get out of our centuries-old mental models of education.

Here are some possibilities – off-ramps from the death spiral.

The first opportunity: Change from a sole focus on access, to embrace completion.

The basic economics of higher education is that costs of higher education vary with enrollment, but payoffs from higher education vary not with credit hours earned, but with completion of academic objectives – typically degrees or certificates.

So colleges and universities can change by embracing the importance of completion, instead of merely access.

A new objective should be to help ensure that the students our campuses admit complete their educational objectives. Let's get out of the old role of being gatekeepers – ensuring "only the very best make it through," and recognize that everyone on campus has an opportunity and responsibility to help students get out, not just in.

The challenge, though, is not becoming K-12-like, cheapening standards or cut scores in order to increase completion rates, for that will do nothing to help the economy.

A second opportunity: Change from an academic model based on Carnegie units, to the holistic development and mastery of needed knowledge, skills, and dispositions.

Tackle the question: "What education is required for our graduates to participate successfully in the 21st century economy and contribute to a free and democratic society?"

We need to change from teaching only the things I'm good at as an educator or institution, to the effective education of the whole person; from a focus on the teaching process, to a commitment to the learning outcome.

The productivity of the participants in and graduates of America's colleges and universities is measured by their contributions to the economy and society – and these contributions are a product of their competencies.

How effectively are our campuses adding value to our students: identifying and helping develop not only what their graduates know and can do, but also what they actually will do.

A third opportunity: Shifting from once-in-a-lifetime education to continuous education – what Jim Duderstadt, President Emeritus of the University of Michigan has called moving from "just-in-case" education (where we open up students' heads and pour all we can into them by the time they're 20-something, "just in case" they need it sometime in the future), to just-in-time, and just-for-you education.

Help define and then provide what it takes to be an effectively educated person so graduates can begin working and then come back for additional education, as they need it.

With the continuingly rapid increase in knowledge, our graduates will need to continue to learn more throughout their lives, not only to get a new job, but indeed, even to keep their current jobs. We will need to invent new ways they can get this general and specialized education where and when they need it.

To achieve some of these opportunities, there will be a fundamental need: To define new concepts of compensation.

Our 900-year-old model of higher education is one in which we measure learning by credit hours accumulated at the foot of the master.

To tackle the question of developing and certifying competencies, we must change old mental and business models of seat time paid for to provide remuneration of educators.

We need to address the challenge set down over a decade ago by the then-president of the National Education Association, Bob Chase, who called for a new unionism in education – to move away from his union's singular focus on job protection and salary increases – a focus shared by their brothers and sisters in the United Autoworkers Union that had nearly killed the U.S. auto industry.

And lest you think that adopting such a shamefully "vocational" view of higher education is something that only public campuses might consider, let me refer you to Liz Coleman, President of Bennington College, who has called for a Reinvention of Liberal Arts Education.

In her 18-minute TED talk, she throws down a dramatic indictment of the failure of liberal arts education, and makes a compelling case for the change her college is undertaking. (Who here has seen that talk? For the rest of you, if there is one thing I hope you takeaway from my presentation, it is to go to TED.com, search for Liz Coleman, and listen to her talk!)

While I'm convinced of the need to change and am staggered by the challenges ahead, I'm buoyed by President Coleman's closing words in her talk.

I share her hope that America's educators – the single biggest concentration of intelligence this country has – will change their historical practices and start creating the future we all need.

I look forward to working with you to be part of that change. Thank you.